A public inquiry has opened into Oberston Holdings' plans for a £10m development in Preston after it was thrown out by the council's planning committee last year on the grounds that it would probably prejudice the city's £700m Tithebarn scheme.
The company, which is owned by the Patel family, wants to build an apartment and office complex at the junction of Shepherd Street and Rose Street.
A proposed new city bus station site covers part of the area on which the Patels want to build the complex.
The firm first submitted plans for the development in September last year, but when the plans were thrown out by the planning committee on the grounds that it did not conform to council planning policy and was considered prejudicial to the Tithebarn project, Oberston decided to appeal.
Although a smaller version of the previous application was resubmitted in December last year, that too was turned down by councillors.
The decision over the first application is now being considered at the public inquiry at Preston Town Hall, during which written and spoken evidence from the applicants and the council is being examined by a Government inspector.